Turkish investors eye Cyprus stocks

05 June, 2014

Investors from Turkey have contacted the Cyprus Stock Exchange asking how they could buy shares or companies listed on the Cypriot bourse, senior stock market officials said Thursday.

The requests were “a few” and exploratory, a senior officer said on the sidelines of a press briefing.
However, CSE Director Nondas Metaxas clarified that as Cyprus is now regarded by the benchmarking FTSE as an “Emerging-plus” market, due to the reduction of its traded volume, underperforming stocks “seem very attractive indeed for foreign investors who could snap up companies at a fraction of the market or net asset value.
Metaxas said that the suspension of Bank of Cyprus and the winding up of Laiki Popular Bank slashed more than 75% of the CSE’s daily volume prior to March 2013 when the Eurogroup of Eurozone finance ministers imposed a bail-in of depositors’ savings to recapitalise Bank of Cyprus and absorb the defunct Laiki Bank.
“Our daily volume has trickled down to anything from 50,000 to 150,000 euros,” he said.
That is why the CSE is looking to simplify its stock structure with just two categories – Main and Alternative – while it is also keen to attract mutual fund companies, one of which has already listed 16 funds.
Metaxas said that the bourse is waiting for listed companies to submit their audited accounts for 2013 and have given them an extension beyond the April 30 deadline in order to comply.
“Our aim is to ensure companies remain listed and resume trading, albeit in a special category, in order to ensure the protection of minority shareholders.”
He said that beyond mutual funds, the CSE is contemplating the listing of foreign exchange instruments, as well as commodities, particularly farming goods and futures contracts.
“The island’s discovery of natural gas resources has made us plan ahead for a dedicated Energy sector, just as we did in the past with the Shipping sub-sector, while the government’s commitment to privatise at least three public utilities – telco Cyta, power generator EAC and the Cyprus Ports Authority – also bodes well for the bourse as these would have to be fully or partially privatised and listed with an IPO on the CSE.”
Metaxas added that the privatisation of the CSE itself is still far away on the government’s agenda, but well within the plan until 2018.
The CSE also undertook to act as a collecting agent and processing manager for the 6-year retail savings bonds to be offered on a monthly basis with a cap of 10 mln euros per issue.
“The first issue was a success with 7.5 mln euros offered,” Metaxas said.
The Ministry of Finance said that it hopes to attract about 100 mln euros of investments a year from among money that has escaped the banking system and investors are cautious to return as deposits. That is why the government is offering an average 4% yield on the 6-year plan with an attractive 3% tax on interest, as opposed to 30% tax charged on the interest of all bank deposits.